U.S. Court of Appeals Decisions Expand the Ability to Obtain Documents and Testimony for Use in International Arbitrations
28 U.S.C. § 1782 (“Section 1782”) is a powerful federal tool that allows an applicant to obtain documents or testimony from a person or entity who “resides or is found” in the United States “for use in a proceeding in a foreign or international tribunal.” This statute permits expansive U.S. discovery which may not otherwise be available to parties in a foreign jurisdiction. The U.S. Supreme Court’s decision in Intel Corp. v. Advanced Micro Devices, Inc.(“Intel”),1 provides the framework for analyzing Section 1782 applications.
Federal courts have been divided, however, on the scope of Section 1782. This includes whether Section 1782 applies to private international arbitrations and whether the documents sought must be located in the U.S. Two recent decisions from the U.S. Court of Appeals for the Sixth Circuit (“Sixth Circuit”) and the U.S. Court of Appeals for the Second Circuit (“Second Circuit”) have addressed those issues and, in both cases, expanded the potential reach of Section 1782 to obtain discovery for use in international arbitrations.
Sixth Circuit Holds That Section 1782 Applications May Be Used to Obtain Evidence for Use in Private Commercial International Arbitrations
In two cases decided prior to Intel, the Second Circuit and the U.S. Court of Appeals for the Fifth Circuit (“Fifth Circuit”) held that the term “tribunal” in Section 1782 includes only “governmental or intergovernmental arbitral tribunals and conventional courts and other state-sponsored adjudicatory bodies.”2 After Intel, federal district courts (including district courts within the Second Circuit) have been divided on whether Section 1782 can be used to aid participants in private international arbitrations – the type of arbitration proceedings that private parties, located in different countries, often elect for dispute resolution under a contract.3 Until recently, however, no other federal appellate courts had addressed the issue.
On September 19, 2019, the Sixth Circuit held in Abdul Latif Jameel Transp. Co. v. FedEx Corp. (“Abdul Latif”) – contrary to the Second and Fifth Circuits – that Section 1782 permits discovery for use in “private, contracted-for commercial arbitrations.”4 In that case, a party in a commercial arbitration in Dubai sought discovery from a U.S.-based corporation. The Sixth Circuit evaluated the meaning of the word “tribunal,” using dictionary definitions and the word’s usage in legal writing, and determined that it included “privately contracted-for arbitral bodies with the power to bind the contracting parties.”5 The Court, therefore, held that the private commercial arbitration in Dubai was a “foreign or international tribunal” within the meaning of Section 1782.6
The split between the Sixth Circuit and the Second and Fifth Circuits sets up a potential U.S. Supreme Court review of the definition of “foreign or international tribunal.” Absent a Supreme Court decision reversing the decision in Abdul Latif, Section 1782 discovery may be available for use in private international arbitrations where the discovery targets “reside” or can be “found” in the Sixth Circuit,7 or any other U.S. jurisdiction that decides to follow the Sixth Circuit’s reasoning.
Second Circuit Holds That Section 1782 Can Be Used to Obtain Evidence Held Outside the United States
In In re del Valle Ruiz (“Ruiz”), the Second Circuit held that there is no per se bar under Section 1782 to extraterritorial discovery.8 That case involved legal proceedings in Europe regarding a government-forced sale of a Spanish bank. Parties to the foreign proceedings filed a Section 1782 application in the U.S. District Court for the Southern District of New York (“District Court”) seeking discovery from the Spanish purchaser of the bank and the purchaser’s New York-based affiliate. The District Court denied the application for discovery against the purchaser because it was not “found” within the district, but granted discovery against its New York-based affiliate, which was “found” in the district.
On appeal, the Second Circuit held that Section 1782’s “resides or is found” language does not limit jurisdiction to physical presence in the U.S.; rather, it extends Section 1782’s reach to the limits of personal jurisdiction consistent with due process.9 Jurisdiction for the purposes of a Section 1782 application is therefore established where the evidence sought “proximately resulted from” the party’s contacts with the district.10 Applying those rules, the Court held that it did not have personal jurisdiction over the Spanish purchaser because the purchaser did not have sufficient contacts in New York.
In contrast, the Second Circuit held that the purchaser’s New York-based affiliate was subject to the Court’s general jurisdiction (because it was “found” in New York) and could be compelled to produce documents, pursuant to Section 1782, even if those documents were located outside of the U.S.11 The Court specified that Section 1782 – following the Federal Rules of Civil Procedure – permits extraterritorial discovery so long as the documents are within the subpoenaed party’s possession, custody or control.12
Previously, the Eleventh Circuit was the only U.S. Court of Appeals that had addressed whether Section 1782 had extraterritorial reach.13 With Ruiz, the Second Circuit joins the Eleventh Circuit in expanding the scope of Section 1782 to reach documents located abroad.14 Accordingly, in certain instances, parties seeking discovery in aid of a foreign proceeding may consider targeting the U.S. affiliate of a foreign entity.
Parties Should Develop a Global Litigation Strategy
In today’s global business environment, parties involved in international arbitrations or foreign proceedings should promptly seek legal counsel to formulate a global litigation strategy. With the continued expansion of Section 1782, that strategy may potentially include submitting an application to a U.S. District Court to obtain relevant information.
For questions regarding the ability to obtain documents and testimony for use in international arbitrations, please contact Jon P. Yormick at firstname.lastname@example.org, (216) 928-3474, (716) 847-7006; Jeffrey D. Coren at email@example.com, (716) 847-7024; or Samuel Borbor-Sawyer at firstname.lastname@example.org, (716) 847-7037.
- 542 U.S. 241 (2004).
- Nat’l Broad. Co. v. Bear Stearns & Co., 165 F.3d 184, 190 (2d Cir. 1999); Republic of Kazakhstan v. Biedermann Int’l, 168 F.3d 880, 882-83 (5th Cir. 1999).
- See, e.g., In re Iraq Telecom Ltd., No. 18-MC-458, 2019 WL 3798059, at *3 (S.D.N.Y. Aug. 13, 2019) (Section 782 applies to aid International Chamber of Commerce (ICC) arbitration); In re Hallmark Capital Corp., 534 F. Supp. 2d 951, 957 (D. Minn. 2007) (Section 1782 applies to Israeli arbitration). But see In re Operadora DB Mexico, S.A. de C.V., No. 09-CV-383, 2009 WL 2423138, at *7 (M.D. Fla. Aug. 4, 2009) (Section 1782 does not apply to ICC arbitration); In re Norfolk S. Corp, 626 F. Supp. 2d 882, 885 (N.D. Ill. 2009) (Section 1782 does not apply to private arbitration).
- 939 F.3d 710, 730 (6th Cir. 2019).
- Id. at 722.
- Id. at 723.
- The Sixth Circuit includes the federal district courts of Kentucky, Michigan, Ohio and Tennessee.
- 939 F.3d 520, 534 (2d Cir. 2019).
- Id. at 523.
- Id. at 530.
- Id. at 533.
- See Sergeeva v. Tripleton Int’l Ltd., 834 F.3d 1194, 1200 (11th Cir. 2016) (holding that Section 1782 extends to evidence abroad); Four Pillars Enters. Co. v. Avery Dennison Corp., 308 F.3d 1075, 1080 (9th Cir. 2002) (“We need not rule, however, on the question whether § 1782 can ever support discovery of materials outside the United States.”); Kestrel Coal Pty. Ltd. v. Joy Global, Inc., 362 F.3d 401, 404 (7th Cir. 2004) (“Nor need we determine whether § 1782 ever permits a district judge to require evidence to be imported from a foreign nation.”).
- The Second Circuit includes the federal district courts of Connecticut, New York and Vermont. The Eleventh Circuit includes the federal district courts of Alabama, Florida and Georgia. Decisions by the Second and Eleventh Circuits may also be persuasive in jurisdictions that have not addressed the issue.